Oak Harbor will look at alternatives to utility rate hikes

  • Friday, February 21, 2020 1:51pm
  • News

Oak Harbor ratepayers may not be facing increased utility rates, for now.

After several residents at the Tuesday City Council meeting voiced concerns about a projected increase, council members abstained from passing legislation that would dramatically raise utility rates.

The rate hikes were expected to cover the rising costs of the new sewage treatment plant, solid waste disposal and other utilities.

Instead, the council plans to meet at a later date to discuss potential cost saving measures that would mitigate the impact to ratepayers.

“If you make a lot of little bits of difference, you can make a big difference, and that’s what I’m asking for,” Councilman Bill Larsen said.

THE ESTIMATED total utility rate for a single family household was projected to rise from $184.58 last year to $222.30 in 2022.

The wastewater utility rate was projected to have the greatest impact, increasing by $24.91 over the course of three years after the construction of the treatment plant.

According to a presentation by Finance Director Patricia Soule, lowering the fund balance and reducing the capital improvement projects would likely have the greatest impact in minimizing the cost to ratepayers.

Capital improvement projects are used to update infrastructure. Projects for the water fund are estimated to cost $7.77 million from 2020 to 2022 and include projects such as improvements to the cross city transmission main and annual water main replacements.

There are fewer capital improvement projects scheduled for the sewage treatment, or wastewater, fund, but they include projects to replace aging sewer line.

DURING JANUARY’S winter storms, rainwater entered sewage lines causing sewer overflows. The sewage treatment plant was unable to keep up with the excess water.

“We have a brand new facility; it was compromised,” Councilman Jeff Mack said. “You’ve got a brand new heart but your arteries are giving out and those need to be addressed.”

The fund balance is usually 25 percent of the wastewater revenues and is used for unexpected costs and emergencies. The city spent a few years increasing the fund balance in preparation for the sewage treatment plant.

The increased fund balance has been used and the proposed utility rate would keep the fund balance at 25 percent.

Lowering the fund balance would likely reduce the utility rate but could also limit the facility’s ability to deal with unexpected costs.

OTHER OPTIONS the council is considering include continued negotiations with the Navy to add the Seaplane Base to the city sewer plant, and increasing the insurance deductible.

In 2019 the city proposed a $38.5 million buy-in fee to the Navy and about $2.35 million or more a year for maintenance and operation. The Navy uses the old Crescent Harbor Lagoons for sewage treatment.

Currently, the sewage treatment plant is insured for $120 million with an insurance deductible of $5,000. Increasing the deductible to $25,000 would decrease the insurance cost by $57,608.

“In the long term, that’s a wise decision, but I don’t know if that would move the needle on the rates when you look at the size of the budget. But I think it’s just good business practice to do that,” Councilman Joel Servatius said.

Oak Harbor is planning to develop new homes and housing over the next few years.

Resident Neill Ryan said he wanted to know how the new neighborhoods and developments would affect the utility rate.

“At a time where we are discussing the importance of low-cost housing, a $40 increase in the next three years to utilities for a family is significant,” Matt Ross said, adding he wanted to know what measures were going to be put in place to cap the increase.

HOW THE new developments in the city would impact the rate increase is unknown.

“We can give great numbers about the number of applications we have in the office, the number of units which are projected, we could even maybe guesstimate,” Development Services Director Steve Powers said, “and I use that word purposefully as to when they might start construction upon approval, but we have no way of knowing for sure whether those units will come into being in that 36-month window.”

The council will consider its options and send questions to Shawn Koorn, of HDR Engineering, on Feb. 21, to see what adjustments could be made to lower the utility rates.

In other action:

• The council extended the permit moratorium on downtown development for another six months to allow for more research and to hear from the public.

• The council also passed a resolution to officially declare the Feb. 6 winter weather an emergency. The declaration was made to keep the city in accordance with Island County and the state when the city seeks reimbursement or refund from FEMA.

• Oak Harbor Police Chief Kevin Dresker received a Patriot Award from the Employer Support of the Guard and Reserve for his support of the military personnel who work in the department.

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